Business Times - 28 Oct 1997
By Ong Yong Hwee
UP TO NOW, South-east Asian countries' economic growth has been the result of good political and social order, as well as positive pro-business development efforts. Multinational companies responded and capitalised on the region's favourable factors of production. The consequence was the buoyant Asian economic climate.
The Asians and many others adopted what I term an "instant noodle" economic development approach. The Maggi instant noodle slogan: "Fast to cook, Good to eat" (and obviously cheap) summed up its key characteristics.
And, broadly speaking, this simple approach has been one of the key determinants in Asia's prosperity in the last quarter of the 20th century. However, as with instant noodles, we cannot price ourselves much higher. Otherwise, the cost-conscious buyer will go for an alternative cheaper brand. And the not-so-cost conscious one, who is generally more fussy, will be rather selective and perhaps go for other more tasty and upmarket options.
As the more developed Asian economies appeared to be too expensive for the instant noodle economic development approach to be sustained, the regional currency turmoil set in and does come as a reprieve.
Hopefully, all Asian countries will take this opportunity to strengthen internally, during this seemingly uncertain period.
But first, the South-east asian economies have to go back to basics and keep tabs on the cost of their factors of production, which have spiralled over the years.
Whilst the instant noodle approach is a sound one and can, in fact, quick-start any economy, Asian economies need, in parallel, to develop their own indigenous capabilities.
To this end, I believe two other significant ingredients need to be in place, that is, origination/innovation and ownership of ideas. This next lap requires further development in terms of creating a more nurturing environment where creative juices can flow. A "can do" and proprietary mindset has to be inculcated into the young.
In Singapore, for example, the recent move to a more creative or application-oriented educational system is a right move towards this direction. Singapore is now pumping in a lot of R&D funds to the MNCs which are utilising local talent in their research endeavour. Hopefully, some of these individuals can later spin out new ideas and become the new generation of successful entrepreneurs.
The larger local companies can also be encouraged, with appropriate government support, to allocate financial resources into nurturing and developing individuals with innovative ideas.
In this way, more Sim Wong Hoos can grow their Creative Technology and, eventually an "Asian Microsoft" or an "Asian Motorola" can emerge.
What South-east Asian companies really need, beyond finance, is to develop a new mindset of what talent they must have and change their traditional hiring philosophy. With so many Asians excelling in top foreign universities, countries in the region have to find the right incentives and create a suitable environment and culture to entice these graduates back to work. With talent back in Asia, new inventions and innovations become the property of such Asian companies. Ownership of ideas, information and technology will be the keys to managing one's destiny.
Regional companies need to move beyond owning supporting services like PCBA subcontracting, diecasting and molding. These companies have to bring in new talent and find new products and develop new technologies to move beyond their existing status quo. Only then can this region be strengthened to soar beyond the instant noodle tag.
The writer is a mechanical engineer by training and a business consultant by profession
By Ong Yong Hwee
UP TO NOW, South-east Asian countries' economic growth has been the result of good political and social order, as well as positive pro-business development efforts. Multinational companies responded and capitalised on the region's favourable factors of production. The consequence was the buoyant Asian economic climate.
The Asians and many others adopted what I term an "instant noodle" economic development approach. The Maggi instant noodle slogan: "Fast to cook, Good to eat" (and obviously cheap) summed up its key characteristics.
And, broadly speaking, this simple approach has been one of the key determinants in Asia's prosperity in the last quarter of the 20th century. However, as with instant noodles, we cannot price ourselves much higher. Otherwise, the cost-conscious buyer will go for an alternative cheaper brand. And the not-so-cost conscious one, who is generally more fussy, will be rather selective and perhaps go for other more tasty and upmarket options.
As the more developed Asian economies appeared to be too expensive for the instant noodle economic development approach to be sustained, the regional currency turmoil set in and does come as a reprieve.
Hopefully, all Asian countries will take this opportunity to strengthen internally, during this seemingly uncertain period.
But first, the South-east asian economies have to go back to basics and keep tabs on the cost of their factors of production, which have spiralled over the years.
Whilst the instant noodle approach is a sound one and can, in fact, quick-start any economy, Asian economies need, in parallel, to develop their own indigenous capabilities.
To this end, I believe two other significant ingredients need to be in place, that is, origination/innovation and ownership of ideas. This next lap requires further development in terms of creating a more nurturing environment where creative juices can flow. A "can do" and proprietary mindset has to be inculcated into the young.
In Singapore, for example, the recent move to a more creative or application-oriented educational system is a right move towards this direction. Singapore is now pumping in a lot of R&D funds to the MNCs which are utilising local talent in their research endeavour. Hopefully, some of these individuals can later spin out new ideas and become the new generation of successful entrepreneurs.
The larger local companies can also be encouraged, with appropriate government support, to allocate financial resources into nurturing and developing individuals with innovative ideas.
In this way, more Sim Wong Hoos can grow their Creative Technology and, eventually an "Asian Microsoft" or an "Asian Motorola" can emerge.
What South-east Asian companies really need, beyond finance, is to develop a new mindset of what talent they must have and change their traditional hiring philosophy. With so many Asians excelling in top foreign universities, countries in the region have to find the right incentives and create a suitable environment and culture to entice these graduates back to work. With talent back in Asia, new inventions and innovations become the property of such Asian companies. Ownership of ideas, information and technology will be the keys to managing one's destiny.
Regional companies need to move beyond owning supporting services like PCBA subcontracting, diecasting and molding. These companies have to bring in new talent and find new products and develop new technologies to move beyond their existing status quo. Only then can this region be strengthened to soar beyond the instant noodle tag.
The writer is a mechanical engineer by training and a business consultant by profession
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